Upcoming Chapter Meeting: AAII Phoenix

It’s common knowledge that financial literacy is low and possibly declining in this country. Financial literacy includes not only an understanding of interest rates, inflation, the stock and bond markets and general economic concepts, but also identity theft, credit scoring and broader money topics. Most Americans don’t receive formal training in financial concepts. At the same time, there’s a lot more to learn and understand than in decades past: everything from retirement plans to mortgages to new investment vehicles. Many people haven’t yet shown that they’re up to the challenge, including technologically savvy young adults. Low levels of financial literacy explain part of the wealth gap, as more affluent and literate individuals are better positioned to capitalize on trends in the financial markets, including the recent rebounds for stocks and real estate.

Upcoming Chapter Meeting: AAII Boston

In this presentation, mutual fund manager extraordinaire Ron Muhlenkamp will go over the areas of the markets that he feels holds the best investment opportunities in 2014. One specific area that Muhlenkamp will focus on is that of natural gas. With the price spread between natural gas and crude oil widening significantly as a result of technological innovations in shale drilling, Muhlenkamp will explain why he feels that this potential “game changer” puts the U.S. in a position to cut its energy costs in half during the next decade. Attendees will receive a FREE copy of Ron Muhlenkamp’s book “Harvesting Profits on Wall Street,” a booklet on natural gas, and a copy of the “Muhlenkamp Memorandum” newsletter (while supplies last).

Exchange-traded funds (ETFs) are rapidly approaching $2 trillion in assets in the U.S. alone, making them the most quickly adopted financial product in history. As an early adopter of these funds, Herb Morgan will explain ETFs, the tax advantages they confer, and how to build a diversified ETF-based portfolio.

DIVIDEND INVESTING ALERT FOR THE WEEK ENDING 3/28/2014

A breakup was announced this week. Well, actually there were two breakups announced, but we’ll leave the Gwyneth Paltrow/Chris Martin split to the tabloids, because we’re much more interested in Baxter International (BAX).

Upcoming Chapter Meeting: AAII Orange County

Modern portfolio theory (MPT) comes with a powerful set of tools that can help take the emotional “roller-coaster effect” out of investing and is the best way to achieve long-term capital growth with volatility reduction. Diversification is one of the most misunderstood concepts in investing today. In this presentation, Jason DiNozzi will explain how to be truly diversified, with powerful results. He will show you how new technologies allow MPT to be implemented better than it ever has before and how you can finally take the guesswork out of your investment future.

AAII Sentiment Survey 3/28/2014

AAII Journal Editor Charles Rotblut speaks to Chuck Jaffe of MarketWatch about this week’s AAII Sentiment Survey and the above-average level of neutral sentiment. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

STOCK SUPERSTARS ALERT FOR THE WEEK ENDING March 28, 2014

The stock market dropped on Monday, with biotechnology and other momentum names leading the pullback. The tech-heavy NASDAQ index was among the worst-performing indexes, with no support from big tech names.

DIVIDEND INVESTING ALERT FOR THE WEEK ENDING 3/28/2014

A breakup was announced this week. Well, actually there were two breakups announced, but we’ll leave the Gwyneth Paltrow/Chris Martin split to the tabloids, because we’re much more interested in Baxter International (BAX).

What is likely in store for our economy? Where are markets heading? Dr. Jim Paulsen will give us perspective based on past and current conditions of retail, auto, and real estate sectors as well as on manufacturing, construction, unemployment, consumer confidence and the stock and bond markets.

New Tax Rules for IRAs and Bitcoin

The Internal Revenue Service (IRS) recently issued announcements regarding individual retirement accounts (IRAs) and bitcoin. Since more of you have retirement savings than bitcoins, I’ll start with IRAs.

In the April AAII Journal, which will be on AAII.com early next week, we introduce you to Alvan and Elisa Bobrow. This couple is responsible for promoting a change in the rules regarding when you can and cannot rollover IRA. The rollover rules allow you withdraw and redeposit funds from a traditional IRA on a tax-free basis as long as you do so within a 60-day window. Patrick Gutierrez, a specialist in employee plans at the IRS, told me some people try to take advantage of this window to get what is in effect a free, temporary loan.

I can’t speak to the Bobrows’ reasons for doing what they did, but here is the short version of the events. Between April and September 2008, the couple moved money in and out of three IRAs. The IRS, which currently allows one rollover per IRA account per year, said the Bobrows violated the rollover rules with their actions. The tax court not only ruled in favor of the IRS, but further said the tax code limits aggregate IRA rollovers to one per a 12-month period.

I hope you read that last paragraph carefully. Currently, IRS Publication 590 says if you roll over funds from existing IRA #1 to new IRA #3, you cannot make any other rollovers from these accounts during a 12-month period. You can, however, make a rollover from existing IRA #2 to new IRA #4 at any time. Just after the April AAII Journal went to press, the IRS issued a new bulletin saying that in light of Bobrow v. Commissioner, IRA rollovers will be limited to one per person per year. The new rule will apply regardless of how many retirement savings accounts a person owns. It’s not certain when the new rule will take effect, but the tax agency’s current intention is to have it take effect on January 1, 2015.

The new rollover rule will not apply to trustee-to-trustee transfers. Both Sally Schreiber, the senior tax editor at the Journal of Accountancy, and Mark Luscombe, a principal analyst at CCH Tax & Accounting, confirmed that this means you can move your IRA accounts to as many brokers as you would like over the course of a 12-month period. The key is that you move the actual account, and don’t move funds from one IRA to another. (If that sounds like a technicality, realize it is a big one.)Read more »

AAII is a nonprofit organization that arms individual investors with the education and tools they need to build wealth. From stock investing to financial planning and retirement funding, AAII covers all your needs.